Chevron’s Richmond refinery plans upgrade to accommodate Saudi crude

Chevron Corp. (CVX) plans to run higher-sulfur Alaskan and Middle Eastern crudes when it completes work at Northern California’s largest refinery in 2016, not the Bakken oil helping spur the US path to energy independence.

Chevrons 245,300-bpd Richmond refinery is
seeking regulatory approval to replace a hydrogen
plant and increase capacity at the fluid catalytic
crackers hydrotreater and sulfur-recovery system. The
upgrade will take about two years and could be done as soon as
mid-2016 if city officials green-light the project in June or July, Nicole
Barber, a company spokeswoman, said in an interview at the
plant yesterday.

Richmond imports mostly light, sour crudes from
Saudi Arabia, government data show. It will use the
same sources after the work, Barber said. The US supplied 86%
of its own energy needs last year as horizontal drilling and
hydraulic fracturing, or fracking, unlocked supplies from shale
formations such as
North Dakotas Bakken and
Texass
Eagle Ford. Imports also
climbed from
Canadas tar sands.

Bakken is too light to fully utilize our equipment and
tar sands are too heavy, Barber said. This refinery
processes more intermediate crudes. The middle of the barrel is
our sweet spot. Thats the best type of crude we can
run.

Crude Prices

Saudi
Arab Light crude to the US dropped $1.16 a barrel to
$97.05 as of 11:47 a.m.
New York time today, data compiled by Bloomberg
show.
Bakken oil for delivery at Clearbrook,
Minnesota, was down 91 cents to $96.83 a barrel.
Tesoro Corp., the largest refiner on the US West
Coast, has said it costs $9 to $10 a barrel to ship Bakken by
rail to Northern California.

Groups including Communities for a Better Environment and
Earthjustice have fought the project, saying that the proposal
would allow Chevron to process heavier and more polluting feedstock such as crudes from
Canadas oil sands.

The plans are
San Ramon, California-based Chevrons second
attempt to upgrade the 112-year-old Richmond refinery, after a Superior Court
judge halted a broader revamp in 2009. The hydrogen plant was
about halfway done at the time of the ruling, which said an environmental review of the work was
flawed.

Columns, one as long as 100 ft (30 m), have been sitting at the
refinery since then as the company awaits approval to restart
construction.

More work

Theres still electrical work to be done, piping,
and weve still got a bit more construction above ground,
Barber said. Its about two years more work to
be done.

Earthjustice
described the courts ruling in 2009 as an
environmental justice victory that would prevent
the plant from poisoning the community.

A fire at the refinerys crude unit in August 2012 that
sent a plume of smoke thousands of feet into the air further
increased scrutiny over the hydrogen project. Federal and state
investigators have said the line that ruptured, igniting the
fire, appeared to have corroded after being exposed to sulfur
compounds at high temperatures.

A series of train explosions and derailments of rail-cars
carrying crude have also fueled concern that Chevron will use
the project to run more shale oil from North Dakotas
Bakken formation. Most of it is delivered by
rail-car.

The Richmond refinery isnt equipped to
unload oil from trains and receives all of its crude by tanker,
Brian Hubinger, a technical adviser on the project, said at the plant
yesterday.

Chevron would upgrade piping at the crude unit as part of the
hydrogen-plant work, Hubinger said.

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